In Tuesday’s trading, while stocks experienced a drop, Bitcoin (BTC) remained relatively stable. The leading cryptocurrency, as measured by market capitalization, was trading at approximately $27,200, representing a 1.1% increase over the past 24 hours. Shortly before the opening of European equity markets, Bitcoin briefly surpassed $27,400. Over the past two weeks, BTC has remained within a narrow range between $26,500 and $27,500, as investors express concern over continued regulatory issues in the cryptocurrency market, which have resulted in reduced market liquidity, as well as macroeconomic uncertainties such as the recent stalemate over the U.S. debt ceiling.
According to Tim Frost, the CEO of digital wealth platform Yield App, the “sideways movement” in the cryptocurrency market has been preferable to the downward movement that characterized the market in 2022. However, Frost also pointed out that the market appears to be stagnating, with liquidity being redistributed in different directions, and only committed cryptocurrency enthusiasts and active traders participating in the market. In an email to CoinDesk, Frost noted that while the market remains stable, there is a sense of inertia and a lack of momentum in the cryptocurrency industry.
Frost observed that the cryptocurrency market’s current capitalization, which stands at approximately $1.3 trillion, has remained relatively unchanged from a year ago. He further stated that there is no apparent catalyst that could cause significant movement in the market in either direction. In his view, the global macroeconomic environment is still uncertain, although there are indications of a more positive outlook, with inflation rates expected to decline in the US, UK, and EU in the coming months. However, Frost emphasized that the market appears to be in a state of inertia, with little significant activity taking place.
The latest Consumer Price Index reading on U.S. inflation has indicated a rate below 5%, which marks the first time since early 2021, although it is still significantly above the Federal Reserve’s target of 2%. Meanwhile, Ether (ETH) has remained within its two-week range, trading at $1,850, representing a modest 1.6% increase over the past 24 hours. While most other major cryptocurrencies have experienced slight gains, with APT and SOL, the native tokens of the Aptos and Solana smart contracts platforms, recently increasing by 3.8% and 2.1%, respectively.
Amid concerns over the debt limit, stock prices experienced a decline, with the Nasdaq Composite, which focuses on technology companies, dropping by 1.2% after it had reached a 2023 high the previous day. Similarly, the S&P 500 and Dow Jones Industrial Average (DJIA), both of which have significant technology components, decreased by 1.1% and 0.6%, respectively. Meanwhile, the yields on 2- and 10-year Treasurys rose to nearly their highest levels since March before experiencing a slight decline.
On Monday, the cryptocurrency markets experienced a minor boost following the release of a leaked document obtained by CoinDesk, which suggested that the European Commission may be willing to adopt a more moderate approach towards cryptocurrencies. The document indicated that commercial lenders would be permitted to hold stablecoins and tokenized assets more easily. In addition, Strahinja Savic, the head of data & analytics at FRNT Financial, based in Canada, commented in an email to CoinDesk that the correlation between the S&P 500 and Bitcoin has been decreasing since April, currently standing at -0.23.
Savic stated that the recent decline in correlation between Bitcoin and traditional assets has been a recurring trend that has persisted into the current year. He further commented that as significant macroeconomic events such as the debt ceiling debate and Fed rate policy come to a head, it will be intriguing to observe the extent to which bitcoin has decoupled from the wider market. Additionally, Savic highlighted that the percentage of Bitcoin’s total supply has remained unchanged for over a year, reaching a new record of 62.13%. He interpreted this as a sign that bitcoin “holders” remain committed to the asset at present.
